Economy

KRA nets paltry Sh35m from small trader levy, lays blames on counties

kra

Kenya Revenue Authority headquarters in Nairobi. FILE PHOTO | NMG

The taxman has blamed its dismal collection from small traders on lack of support from counties. The Kenya Revenue Authority (KRA) collected a paltry Sh35 million against a projection of Sh2 billion on presumptive tax in a span of one year.

Finance Act 2018 introduced a presumptive tax of 15 percent of trade licence fees or single business permit fees for the informal sector. County governments are charged with responsibility of transmitting the collections to the KRA.

“The performance of the presumptive tax has been dismal due to lack of adequate buy-in from counties which is critical to the implementation of the tax,” Maurice Oray, KRA deputy commissioner for corporate policy, told MPs.

He also blamed poor collections on lack of an integrated revenue collection system between the KRA and counties.

Currently, counties and the national government utilise 11 different revenue systems, which is blamed for the low level of collections.

In February, President Uhuru Kenyatta directed the Commission on Revenue Allocation (CRA), the Council of Governors (CoG), the National Treasury and the KRA to come up with an integrated revenue collection system.

The integrated system would be used both at the national and county governments and would eliminate the duplication of efforts and waste of resources.

The KRA has also blamed the dismal collection from small traders on the "static nature" of the licence and permit fees which means that the tax charged is not commensurate to the income earned.